7/12/2012 @ 2:35PM12,744 views

The Dog-Eat-Dog Welfare State Is Lose-Lose

John Maynard Keynes—not exactly history’s greatest opponent of government spending—is reported to have said he would be worried if government outlays ever surpassed 25 percent of GDP. Well, in recent years both American and British government expenditures have hovered around 40 percent of GDP. The bulk of that spending, perhaps as much as 70 percent in Britain, goes to feed the ravenous welfare state.

Clearly it’s time to question the welfare state. But such questions are too often viewed as taboo. Anyone who challenges it is viewed as seeking a return to the “dog-eat-dog” world of unfettered capitalism—a world where sellers supposedly exploited buyers, employers exploited workers, the rich exploited the poor.

But capitalism, to say nothing of poor old Fido, has gotten a bad rap.

Capitalism—real capitalism, not the mixed economies that have existed for the past century—is the system based on private property, free production, and voluntary trade. It’s not a zero-sum game where people battle over a fixed pie. Each person is free to create wealth and to trade it with others, such that they all benefit.

That’s the beauty of capitalism. Because all economic relationships are voluntary, people only enter into them when each party thinks it’s to his advantage. When you accept a job, for instance, it’s not because the employer forced you to work at the point of a gun. It’s because you valued the paycheck more than other possible uses of your time. It’s a gain for you and a gain for your employer. In some cases you may not be thrilled with the work or the pay, but the fact that a win may be smaller than you would have preferred doesn’t change the fact that it’s a win. And if what first seemed like a win turns out badly, you’re free to make a new bargain.

Capitalism isn’t dog-eat-dog: It’s win-win.

We don’t have capitalism anymore—not in Britain, not in the rest of Europe, not in the United States. What we have instead are massive welfare states. And if the false charge against capitalism is that it allows “the strong” to exploit “the weak,” then the true nature of the welfare state is that it allows “the weak”—i.e., the unproductive—to exploit “the strong”—i.e., the productive.

And exploiting they are. The Davey family, for instance, made headlines in 2010 for receiving £42,000 in state-provided benefits while driving a Mercedes, enjoying cutting-edge electronics, and continuing to have children (at the time of the story they had seven with another on the way). Mrs. Davey had never worked, and Mr. Davey had quit his job after he figured out he could do better by living on the dole. “I don’t feel bad about being subsidized by people who are working,” Mrs. Davey told The Daily Mail.

This sort of story does not represent some bizarre failure of the system—it captures the system’s spirit.

The truth is that the goal of the welfare state is to make the productive sacrifice for the unproductive. It establishes the principle that a person is entitled to state support simply by virtue of his need. But the state doesn’t have any money. In order to provide support, it has to take money from the people who earned it. Translation? A person’s need entitles him to your money. The less value he creates, the more rewards you owe him—and the more value you create, the greater your duty to serve him, and all the Daveys of the world. As Ayn Rand put it in her novel Atlas Shrugged, “If you succeed, any man who fails is your master; if you fail, any man who succeeds is your serf.”

How is that fair?

In place of capitalism’s philosophy of win-win, the welfare state puts everyone’s wealth up for grabs, ensuring that one person’s gain comes at his neighbor’s expense. Talk about dog-eat-dog.

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Yes, it IS the dog-eat-dog welfare state. The entitlement-mongering politicians “eat” the assets of productive people and spit them out to the entitlement receivers. The opposite of win-win, it’s more of a simmering civil war.

Everyone who receives old age benefits from Social Security – one form of “Welfare” – worked for those benefits. They are not parasites living off of the productivity of others, they were productive people who are now too old to work. They themselves once supported other former workers who were too old too work and now that they are too old, others support them. One can think of as “paying forward”.

You are right to correct his point about social security, but the rest of the mentioned entitlement programs were definitely not worked for by their recipients. Furthermore, it is an involuntary program, amounting to the confiscation of an individual’s assets to be returned in a time, manner, and amount to be determined by the government. This goes against the intent of our Constitution and is antithetical to a free society.

If it were true that Social Security participants worked for “those” benefits, then Social Security would be sustainable on the strength of their taxes and the interest from its trust fund alone.

But, it isn’t. The common refrain in rescuing ailing welfare systems is that the rich aren’t paying enough of their fair share. By what standard, fairness? If the degree in which the rich resort to using such programs is a reasonable, objective standard of fairness, then it may be argued the rich are actually paying way too much. But, no, “fairness,” in typical leftist morality, is “giving what they can afford to give.”

Programs dependent on redistributing wealth are parasitic. And that such systems are involuntary make them fundamentally immoral.

You wrote:”If it were true that Social Security participants worked for “those” benefits, then Social Security would be sustainable on the strength of their taxes and the interest from its trust fund alone.”

You do not understand how Social Security works, it is not an investment fund, it is an insurance pool. Any insurance program, whether being for automobiles, houses, life (actually death), social security, or air travel, work on the same principle of pooled risk. In the case of term life insurance (or more accurately death insurance), policy holders pay premiums which go into a common pool and draw benefits from that pool as needed. Some people will pay their premiums for 30 years and life and their beneficiaries never collect any benefits. Some people pay the first months premium and then die. On average, if the managers of the pool are successful at balancing the risks in the pool, less money goes out as benefits (when someone dies) than comes in a premiums. This is based on having a large number of low risk individual paying in while having a smaller number of high risk individuals (or rather their beneficiaries) collecting benefits. Social Security works on this same principle. I only works because there are low risk and high risk participants.

The problem is that you conceive of Social Security as a Investment Fund where people contribute money to a fund which gets invested into stocks and bonds and increases in value over that time. When they retire, they withdraw money from that fund. People can join or withdraw from these Funds and the money that one individual puts in still belongs to that individual. That is not what Social Security is.

Social Security Fund is no different from the Highway Trust Fund. Money comes in from taxes, gets put in the fund, and then is spent on building highways. The United States Army is a government service I pay for with my income tax. The Interstate Highway System is a government service I pay for with Federal Excise Tax. Taxes pay for services, including but not limited to Social Security.

You wrote:”But, it isn’t. The common refrain in rescuing ailing welfare systems is that the rich aren’t paying enough of their fair share. By what standard, fairness?”

No one raised the issue of “fairness”, I do not nor did the two authors of this blog. You are answering a question no one asked.

You wrote:”Programs dependent on redistributing wealth are parasitic. And that such systems are involuntary make them fundamentally immoral.”

Social Security, Medicare, and Medicaid do not redistribute wealth, they are insurance programs, no different morally from your automobile insurance. If you drive a automobile and purchase collision insurance, your premiums are being put into a pool. If after 30 years you never have an accident, you have “lost” all of that money. Another individual might have several accidents and collect millions of dollars. Is that “re-distribution of wealth”? No, it is just how insurance works.

You wrote:”Furthermore, it is an involuntary program, amounting to the confiscation of an individual’s assets to be returned in a time, manner, and amount to be determined by the government.”

This is true for everything government does, not just Social Security. It is how the FBI is operated and the CIA.

You wrote:”This goes against the intent of our Constitution and is antithetical to a free society.”

The constitution gives government exactly this power to tax and spend. The old Articles of Confederation did not allow for this and that is why they were abandoned in favor of the Constitution which does give government exactly those powers.

The answer is yes. If you live in the United States, you in all likelihood already have. The vast majority of people are already paying into the Social Security Insurance fund and the Unemployment Insurance fund. In most states there are laws requiring the purchase of automobile collision insurance if one owns and operates a motor car. In Massechusetts, you would required by the Romneycare law to purchase health care insurance.

SS: People pay in and are promised a return when they retire, except the money they paid is gone and SS depends on new participants to pay off the old participants. How is that different from a ponzi scheme? A system of huge liabilities, no assets, and requires constant new membership dollars to stay afloat.

Legal definition, “A Ponzi scheme is a type of investment Fraud that promises investors interest if they loan their money. As more investors participate, the money contributed by later investors is paid to the initial investors, purportedly as the promised interest on their loans. A Ponzi scheme works in its initial stages but inevitably collapses as more investors participate.” Sounds a lot like SS.

You also dodge the fact that SS was initially set up to to help people through their last 5 to ten years, not their last 30 to 40 years.

David, respectfully those programs in fact redistribute wealth. First, your insurance analogy is simply false on several levels. You note the difference between high risk and low risk participants. Yet you ignore that in the real insurance world, premiums are based on many factors, including risk. So in your example, the frequent car wrecker’s premium will in fact increase due to that person’s loss history.

This is simply not the case with most welfare programs. The amount you receive is not related to the amount you contribute (except for ss). For example, medicare and medicaid taxes do not phase out. Thus, as a person’s income increases so does his or her contribution to those programs without regard to whether that person is a low or high risk participant.

Of course, under the existing system where we do not risk rate, once the government “pays” for your healthcare then those risky folks will be asked to tone it down and freedom goes bye bye. Just read some of the UK blogs about these notions of risk rating on the one hand (i.e., tax fat people more, or skydivers more or <insert other risky behavior) or regulating behavior to reduce risk on the other (i.e., no more sodas, no more hamburgers, no more skydiving, etc). It is a brave new world.

Social Security only becomes welfare at the point where more is being taken out than was paid in by the employee and the employer.

Additionally, we often hear that SS recipients are living longer. Some are and some aren’t and many, many have died before receiving much or any of their funds.

I have a lot of criticism for businesses but show me one that operates worse than the federal government in protecting its most productive members and cultivating more of the same. There is a reason our government busts up monopolies but then they are one and one against which the investors have no ablity (except illegal and bribes) to withhold investment and no legal recourse against improper use of funds and it doesn’t seem to matter which party is in charge.

You are entirely mistaken about Social Security. A Ponzi Scheme mimics an Investment Fund. The Ponzi operator tells people that he or she will take their money, pool it with the money from other people, invest it, and return the profits to them. Ponzi schemes appear to be effective at first because some of the money that comes in from later investors is used to pay “returns” to earlier investors. However no actual investments are ever actually made and as more late investors become early investors, it requires an ever increasing number of late investors to give the appearance of paying “returns”. The system simply collapses under its own fraudulent weight.

The problem is that you conceive of Social Security as a Investment Fund where people contribute money to a fund which gets invested into stocks and bonds and increases in value over that time. When they retire, they withdraw money from that fund. People can join or withdraw from these Funds and the money that one individual puts in still belongs to that individual.

That is not what Social Security is. Social Security is an INSURANCE plan, just as the name “Social Security and Diability INSURANCE would suggest.

You wrote:”Why is social security going insolvent? My insurance company isn’t.”

Consider the following stories in the Los Angeles Times.

April 6, 1992 – “The new siren is a frank and gloomy assessment that the national trust fund that pays hospital bills for 34 million Americans on Medicare will be broke in 10 years.” The would be George H.W. Bush telling us that Medicare would be broke in

2002. January 9, 1984 – “Some adjustments are needed to head off bankruptcy in the Medicare system. The trust fund that helps pay doctor and hospital bills for 29 million Americans will run out of money by 1990 if nothing is done” That would be President Reagan saying that Medicare would be broke by 1990.

June 20, 1980 – “Unless Congress acts, the Social Security fund will run out of money to pay retirement and survivors’ benefits by late 1981 or early 1982, the funds government trustees reported Thursday.”

May 6, 1978 – “The social security trust funds that pay benefits to retired and disabled workers will be in good shape for several more decades but the fund that pays hospital insurance under Medicare will go broke by 1990, the trustees told Congress today.” That would be President Jimmy Carter again with a “go broke date of 1990.

August 30, 1960 – “That the [Medicare] bill passed was totally uninformed and almost totally irrational made no difference; the Democratic Presidential candidate can cry that he wanted to do more the old folks and the Republican candidate can say that the Congress might have done less if he hadn’t been so busy…We said that he bill was total uninformed, and it is…Nobody knows what it is right to do about medical aid to the aged because nobody has determined how many need help….Moreover, the political promoters have not had the courage to declare bluntly that everybody at age 65 receive a government health stipend, regardless of need…”

Oct. 8, 1940 – Republican Presidential candidate Wendell Willkie addressed social security – “…I want to say this in connection with social security that unless there is a change in administration those people who are presently paying into social security fund will never get any benefit there from…If it continues down the present path it will eventually bankrupt this country. We are bound to have either bankruptcy or inflation, and I say it very solemnly that those who are paying in on their social security will never get the principal of the social security when they need it in their old age…”

So, in other words Social Security has been going bankrupt for over 70 years! masnaghetti, you may not know it but Social Security was on the verge bankrupting the entire countries before you were even born. Why it will probably be going broke 70 years now.

The stay at home moms and children who collect survivor benefits when the husband/father dies never worked for the benefits. Social Security is in effect subsidized by single people and pays windfall benefits to millions of beneficiaries who never paid into the system. If the program were truly an insurance based system, each potential benefit would have its own annual premium attached to it.

You wrote:”…your insurance analogy is simply false on several levels. You note the difference between high risk and low risk participants. Yet you ignore that in the real insurance world, premiums are based on many factors, including risk. So in your example, the frequent car wrecker’s premium will in fact increase due to that person’s loss history.”

It is not an *analogy*, the Social Security and Disability INSURANCE program is so named because it is indeed an insurance program. All one need to look at the Social Security Act [1] and one can see this basic fact. Title II Federal Old-Age, Survivors, and Disability *Insurance* Benefits, Sec. 202. [42 U.S.C. 402] (a) Every individual who— (1) is a fully insured individual (as defined in section 214(a)), (2) has attained age 62, and (3) has filed application for old-age insurance benefits or was entitled to disability insurance benefits for the month preceding the month in which he attained retirement age (as defined in section 216(l))

You wrote:”This is simply not the case with most welfare programs. The amount you receive is not related to the amount you contribute (except for ss). For example, medicare and medicaid taxes do not phase out. Thus, as a person’s income increases so does his or her contribution to those programs without regard to whether that person is a low or high risk participant.”

Young people are at low risk of attaining age 62 and thus at low risk of retiring and needing either Social Security or Medicare. Older people are at higher risk of attain that age and thus retiring and need those two programs. People who earn more money, when they retire, will withdraw more more money since the monthly payments will be larger, and thus they too are a higher risk.

Moreover, in other insurance programs, benefits are also not proportional to contributions. If I buy a 30 year term life (actually future lost income) insurance policy at age 25, pay 100 USD/month for a policy with a face value of 1 MUSD poicy, and if at age 55 I have not yet died, I (or rather my beneficiaries) will have received absolutely no benefits even though I paid 36 TUSD in premiums. My return on 36,000 USD in premiums is zero.

Conversely, someone else may have purchased exactly the same policy at the same time and then died one month later after only paying one premium. His or her beneficiaries will collect the full face value of the policy, worth much more than the policy holder ever paid in. His return on 100 USD in premiums is 1 MUSD in benefits.

That is just how insurance works, the amount of benefits received has no relation to the amount of premium paid.

Like others here, you are laboring under the misconception that the Social Security and Disability Act is an “retirement fund”. It is not.

It could have been set up that way. However conservatives were against the idea. For example, In March of 1939 the US Chamber of Commerce released a report recommending a “pay as you go” system rather than a fully funded retirement system. The report was specific that instead of a “full reserve”, a much smaller (2.5 to 3 BUSD) “contingent reserve” be created. The report states that what is needed is “a contingent reserve sufficient only to permit continuation of maturing benefit payments during periods of temporary depression…”[1]

It is interesting that conservatives today bemoan the continual underfunding of Social Security but were in favor creating such a minimal program when it was created.

In the private insurance market, each potential benefit comes with its own premium. In the Social Security world, a stay at home wife can collect a retirement benefit based on her husband’s earning record at age 62 and qualifies for Medicare benefits at 65 even though she may have never put anything into the system. Social Security and Medicare may be the most family oriented programs offered by the Federal government for middle class families.

Entirely mistaken? I think that is over-reaching. I’ll stick with the legal definition and SS fits. You state that SS is not a investment fund….seems to be the main distinction you make. If it is not an investment fund, why do we have a box of interest bearing bonds, actually printed, sitting in some basement. You can argue semantics until you are red in the face but functionally, SS is a ponzi scheme.

“But to illustrate the government’s commitment to repaying Social Security, the Treasury Department has been issuing special bonds that earn interest for the retirement program. The bonds are unique because they are actually printed on paper, while other government bonds exist only in electronic form.

They are stored in a three-ring binder, locked in the bottom drawer of a white metal filing cabinet in the Parkersburg offices of Bureau of Public Debt. The agency, which is part of the Treasury Department, opened offices in Parkersburg in the 1950s as part of a plan to locate important government functions away from Washington, D.C., in case of an attack during the Cold War.”

You wrote:”The stay at home moms and children who collect survivor benefits when the husband/father dies never worked for the benefits.”

There are no survivor benefits for husbands or fathers who never worked. To collect social security survivor benefits, like old-age benefits, the original annuitant must have worked at least 10 quarters for the minimum benefits.

You wrote:”Entirely mistaken? I think that is over-reaching. I’ll stick with the legal definition and SS fits. You state that SS is not a investment fund….seems to be the main distinction you make. If it is not an investment fund, why do we have a box of interest bearing bonds, actually printed, sitting in some basement.”

Insurance companies invest the money from their risk pools as well. They do not rely upon premiums alone but rather the premiums are pooled and invested. Different pools are invested in different fashions. So in this respect as well, the Social Security Insurance program is exactly like other insurance carriers.

David, so SS is an insurance program because it is called that by the politicians who created it? I could make a point here about the Obamacare individual mandate being a tax or a penalty, depending on what someone wishes to call it, but I think you know your point is ridiculous.

Things are what they are, regardless of any terminology one wishes to use or any analogies one wishes to make.

When economies crash there is a different mindset involved when compared to an airplane crash. Airplane crashes are investigated objectively. They try to trace the events and causes that led to an undesirable outcome.

Economic crashes are associated with a refusal to ask what caused or led to the situation they find themselves in. They never question the main premises that are involved, and concentrate only on mitigating it’s effects.

How one overcomes this different mindset is best concentrated on the young. The old seldom change.

What’s interesting though is that it usually the young that embrace the “progressive ideology” and it is the older more experienced and successful who come round to capitalism. When I was in college I fancied myself to be a very enlightened, highly moral and free thinking liberal socialist. Probably because I could do nothing of any real value to anyone I loved the idea that I should be cared for by society be cause I “was”. Once I began to find that I had some skills and knowledge that people want to pay me to use for their benefit, however I began to see the foolishness and contradictions inherent in my “progressive ” views.

There are many people – Hillary “It Takes A Village” Clinton come instantly to mind – who believe that anyone who raises a child is doing productive work for society and is therefore entitled to any and all support necessary from society to do so. You also see this in more subtle and insidious ways when, for example, a parent expects his childless coworkers to pick up his slack on the job because he has parental responsibilities to which to attend. Indeed the prevalence and acceptance of this attitude has always stunned me. I once worked with someone who, upon learning that his wife was pregnant with their second child, promptly and unabashedly walked into the president’s office and stated “We’re going to have a baby so I’m going to need a raise.” What stunned me even more was that he got it. Of course, two years later the company folded.

If it were this clear cut the welfare spending would harm an economy, but there is not connection between welfare expenditure and economic growth. http://www.theatlantic.com/business/archive/2012/07/the-myth-that-entitlements-destroy-a-nations-growth-busted-in-1-chart/259645/

Um, is Forbes so hard up on writers that can’t find any that know how to do research or fact check? Seriously, like even very basic facts?

The opening paragraph states that the bulk of federal spending (conflating both American and British governments together, itself ridiculous as they are entirely different nations, they don’t share a budget) is on “the welfare state”, and then claims up to 70%

I suppose it’s how you define “The Welfare State” but let’s look at America and see just how untrue that number is. Even if you’re generous, and we lump Social Security, Medicare, Medicaid and ACTUAL Welfare programs together, most easily searchable stats show it at 40-50%. That’s if I’m being generous, and I see no reason to do that.

Actual “Welfare Safety Net” spending accounts for 10-15% of the budget. Both of those numbers are WAY less than the hyperbolic 70%. Also, the spending as percent of GDP when looking at numbers not provided by you, but like I dunno, the INTERNET in general, is actually around 25%, not 40.

Again, if you think “Welfare State” means I dunno, “ANYTHING the government spends money on that isn’t the military”, then you might have a point, but I’m pretty sure that’s not what you meant.

Listen, I like capitalism. Love it, in fact. One of the reasons why? Reporters who don’t know how to even check for a few different sources and present a valid argument using unbiased information tend to get fired, then I can apply for their jobs. I’m a writer. I could do both your jobs. I could make your point better than you did here and would gladly work for half the wage.

Here that Forbes editors? Whatever you’re paying these hacks, I’ll do for half! Don’t worry, they’ll be cool. They love the free market, and undercutting their price is just part of the game, right?

Adam, thanks for catching that. It should have said upwards of 70% in Britain, whereas in America it’s lower (mostly due to increased military spending). And, to be clear, when we speak of welfare spending, we mean on any program in which wealth is redistributed in the name of people’s “need.” I’ll try to get that fixed ASAP.

Mr. Brook and Mr. Watkins do not work for Forbes but rather for the Ayn Rand Center. Their job is to advocate for theories consistent with Ms. Rand’s philosophy. So unless you are prepared to write pretty much what they are writing, you are unlikely to get “their jobs”.

I should note that their theories about “Welfare” are just fine, if one only ignores all of the facts. The simple fact of the matter is that the vast majority of people on “welfare” (Social Security, Medicare, Medicaid, AFDC/TANI, and so forth) are working or had been working. These programs are subsidies for low wage employers so that they do not have to pay their employees enough to stay alive. If these employers would simply provide adequate wages and benefits, these programs would not be needed.

It is high time to start a serious discussion about our enormous debt and the impending financial disaster/bankruptcy that we are running towards if we do not address it’s cause: the welfare state. The recent Supreme Court decision on Obamacare reveals a court that is willing to trivialize, by playing with words, the legal/moral implications of the individual rights violations in the act, and a total disregard of the fiscal/economic dangers to the country by allowing it to stand. The welfare state not only undermines the economy, but more fundamentally it undermines our morality even at the highest levels of government.

Over 80% of the US budget is military, law enforcement, Social Security, Medicare, and Medicaid. The simple political fact of the matter is that no one is going to cut those. Why? Because the electorate likes these programs. These programs did not fall out of the sky one day or were imposed by some tyrannical dictator. They were created by the elected representatives of the American people, democracy in action. If the American people do not like these programs, they can be eliminated. The elected representatives can repeal these programs when ever they so choose. This never happens exactly because the people who elect those representatives like and want all of these programs.

Here is the hard, central fact of American politics, the ordinary American wants and needs these programs. All of the moralizing and hand-wringing that the two authors of this blog engage in do not and cannot change this fact. They do not like the ideological or political implications of these programs or this fact and are careful to keep their analysis at such a high level abstraction so that the realities do have to be addressed, but it is still unavoidable nonetheless.

You wrote:”It is high time to start a serious discussion about our enormous debt…” So which of these “welfare programs” are you in favor of eliminating?

Social Security, Medicare, and Medicaid were implemented by FDR (or at least their foundations), who overstepped his constitutional bounds to do so. He designed them to be programs that could not be eliminated because those old enough to vote would already be paying into the programs and would not want to lose their benefits. That is tyrannical; FDR is essentially imposing his will on us from the grave by virtue of a manipulative system.

The ordinary American does NOT “want and need these programs.” Lazy Americans want them; no Americans need them. We should eliminate social security, medicare and medicaid, though not military and law enforcement, for obvious reasons.

You wrote:”Social Security, Medicare, and Medicaid were implemented by FDR (or at least their foundations), who overstepped his constitutional bounds to do so.”

No, you are incorrect, Medicare and Medicaid were created 20 years after FDR died. They were passed by the Congress of the United States and signed into law by the President of the United States. They have been challenged in court and up held as constitutional by the Supreme Court of the United States. It does get much more constitutional than that.

You wrote:” He designed them to be programs that could not be eliminated because those old enough to vote would already be paying into the programs and would not want to lose their benefits. That is tyrannical; FDR is essentially imposing his will on us from the grave by virtue of a manipulative system.”

That “manipulative system” is called democracy, it is how all laws work. Laws remain in force until they repealed. The constitution was written over 200 years ago by men now long dead and it this in force. Is that “tyrannical”, are the Founding Fathers imposing their will upon us from beyond the grave? Democracy does mean that everyone has to agree with, Ragnar_Danneskjöld, only that Ragnar_Danneskjöld gets a voice and a vote.

You wrote:”The ordinary American does NOT “want and need these programs.” Lazy Americans want them; no Americans need them. We should eliminate social security, medicare and medicaid, though not military and law enforcement, for obvious reasons.”

Yet Social Security has not been repealed in 75 years of operation, no one has even seriously tried. If the American people did not want it, they could have it repealed at any time.

On the principle of individual rights, it is considered immoral to violate the individual in order to satiate the will of a democratic majority. Obviously, the rationale behind transfer payments is an intention to serve the greatest amount of people – a utilitarian approach. A democratic scale is used to determine the “greatest good” at a given point in time…somehow this is deemed acceptable. I imagine the founders anticipated this atrocity, and were attempting to establish a safe haven where all men were created equal, and everyone took to their own business. Regardless of our interpretations of their intentions, this is what is being argued in comment threads like this; one person can/cannot be sacrificed to the mob and their notions of fairness or “right”.The principle which supporters of individual rights wish to restore is that of inalienable rights – or simply, rights which are not up for a vote every few years. If the implementation of a law requires someone to pay taxes for something he was opposed to in the first place…I cannot see the justice in this scenario. It is living like a child where everything is forced on you “for your own good,” under the assumption you are too ignorant to figure anything out on your own. It is a liberty or death scenario – a forced life is not a life worth living. It is spiritually crushing.

You wrote:”On the principle of individual rights, it is considered immoral to violate the individual in order to satiate the will of a democratic majority.”

You may indeed consider that so, but that is how democracy works. What exactly would the alternative be? markholton-ocarcy? Rand-ocracy? Until you can devise an alternative to “will of the majority”, right or wrong, that is how the system works. Perhaps more to the point, as Sir Winston Churchill once wryly noted:”It has been said that democracy is the worst form of government except all the others that have been tried.”

You wrote:”I imagine the founders anticipated this atrocity, and were attempting to establish a safe haven where all men were created equal, and everyone took to their own business.”

Interestingly, the Founding Fathers had a different perspective. During the fifth session of the fledgling Congress in July of 1798 passed an a bill called “An Act for the Relief of Sick and Disabled Seamen” [1] which was signed into law by John Adams the elder. This law created a government operated maritime hospital service and mandated that owners of private ships turn over to the government money from each sailors pay to operate these hospitals. Notably this congress was dominated by Federalists an the bill was signed by a Federalist president.

Notably this bill was expanded in 1802 by an act of the First Session of the Seventh Congress which on the second page (sec. 3) it states… “And be it further enacted, That from and after the day of ___ next, the master of every boat, raft, or flat belonging to *any citizen of the United States*, which shall go down the Mississippi, with intention to proceed to New Orleans, shall, on his arrival at fort Adams, render to the collector or naval officer therof, a true account of the number of persons employed on board such boat, raft, or flat, and the time that each person has been so employed, and shall pay to the said collector, or naval officer, at the rate of ___ center, per month, for every person so employed; which sum he is hereby authorized to *retain out of the wages of such person*:….” [emphasis added] [2] This bill was passed out of a Democratically controlled congress and signed by a Democratic president, Thomas Jefferson.

The program, called the Marine Hospital Service grew and expanded and eventually became the United States Public Health Service, which is still in operation to this very day. The actual Marine Hospital Service itself was a chain of privately owned and operated hospitals located all over the US and even in Hawai’i as early as 1843. Eventually, in the 1870′s the Service was taken over by the government and run on a quasi-military basis in the Treasury Department. At this time the income was shifted from seamen’s salaries to a tax on cargo. While the USPHS still exists, it ceased operating the Marine Hospitals after the Nixon administration, or after about 200 years.

These two congresses and administrations of course did not need to appeal to the “intent of the Founding Fathers” as many of them were the Founding Fathers. These bipartisan acts express better than any dry monologue today how the Founding Fathers thought about the role of government. Creating an entitlement program for ill and injured seamen was, it would appear, very much with the purview of government responsibility even in the 18th century.

One distinguishing trait of articles written by individuals from the Ayn Rand Institute is the refreshing clarity and rationality of the explanations of what is taken by most others writers as too controversial, too uncorrect politically, or too immoral to deserve serious attention. Freedom and capitalism and the morality of rational self-interest have finally found their proper defenders. Keep up the great work Mr Brook and Mr Watkins!

As the welfare state’s spirit permeates the US, companies are feeling the pain too. Employees come to annual reviews begging for raises, not because they have created increased value for their employer, but because “I can’t afford to cover all my bills”.

This welfare state is poisoning our country. Annual income redistribution checks are marketed as income tax refunds when no income tax was paid. The goal of many is to find a comfortable resting place on the hammock that was built to be a life saving safety net.

I’m not saying that we don’t have a responsibility to care for those in need. As a society, we do need to help people that can’t help themselves.

What I am saying is that the state needs to provide a carrot for those that can help themselves. Create a six month program where unemployment or welfare is coupled with training to get a great job. For example: computer programming in PHP or software testing. Within 6 months, most people could learn enough to be worth $15 an hour (working from home if needed). With a couple years of experience, those wages would be worth $60,000 to $80,000.

Compare that to a couple years experience collecting welfare checks… what kind of wage will that generate? How does that pull people out of poverty?

We need to shift our national welfare state attitude to a work-fair state or a wealth-fair state. Find a market need, fill it and get fair rewards without the nanny state punishing the producers and rewarding the indolent. Wait… is sitting at home watching TV waiting for your next welfare check a reward? Sounds like learned helplessness to me.

Did you work your way from the ground up to where you are, josephspencer?

Your parents provided you no benefits, they offered you no leg up in life? How much of your college did they pay for? How many textbooks did they buy you and how much SAT prep did they schedule you for? When you were young, how many toys did you have? How many computers did you have access to? When you were first starting out, how many contacts did you have through your own family?

John Rockefeller’s parents gave him no benefits, no leg up in life, paid for none of his college and none of his books, because he was raised by a widowed mother with virtually no resources. He used his own intelligence and work ethic to create arguably the greatest fortune in human history. His parents didn’t give it to him, his friends didn’t give it to him, and society didn’t give it to him. He built it. If he could do tjat, anyone can improve themselves. Most people are not as intelligent as he was and they surely do not work as hard as he did, but they certainly don’t need or deserve handouts. Plus, you don’t know josephspencer’s background. Leaping to conclusions about his privilege or lack thereof is insulting to everyone’s intelligence and not germane to the discussion in any case.

“He built it”? He did it all himself, in your little fairy tale? Never mind that he went to a free public school, made possible by high tax rates, and that his father was a profitable salesman. He came from rags, sure, that’s why he had a natural talent for mathematics and accounting from a young age and entered a paid university at the age of 16. He crawled out of a cardboard box into college from nothing. He was completely self-taught and self-made, despite the fact that his father taught him extensively about finances, mathematics, and running a business.

Rich, privileged, white Forbes authors who write catering articles to the top 1% earners in the country have a problem with welfare for the poor? And they have an anecdote about a guy with a Mercedes to back them up? WELL, STOP THE PRESSES!

Maybe if American companies paid a living wage we wouldn’t need welfare. But that problem doesn’t fit into your tiny, puckered asshole worldview, informed only by the silver spoon your father’s wealth fed down your throat, does it?

Mister, If it’s man’s welfare you are concerned with then look towards capitalism—the only social system that is capable of producing abundance and to ever give the poor a chance to not only live, but live well. While I can’t comment on how Don Watkins achieved wealth, at the moment, I do know Yaron Brook wasn’t ‘spoon fed’ by his father’s wealth. Perhaps you should refrain from ad hominem attacks. Do you wish to live in a world where any one’s need is a claim upon your life? American companies do not refuse to pay a living wage. They do want to be able to negotiate with their employees on what wages should be. Mutual consent for mutual benefit is the employer/employee relationship that companies are trying to achieve. Working for an American company is voluntary. The employee has every right to quit and look for work elsewhere if they are unhappy with the wages. No one is saying they can start their own company either. Perhaps the idea of freedom is too big of a concept for you to grasp?

“Rich, privileged, white Forbes authors…” You demonstrate that you are a racist, classist person. Would their views be more valid if they were green, or black, or poor? Booker T. Washington was black and poor and he was diametrically opposed to welfare. What ad hominem attack would you throw at him, if it were socially acceptable? You have an issue with Forbes authors’ arguments, respond with logical arguments. Don’t throw out logical fallacies, it’s beneath you to do it and insulting to us to read it.

And you’ll pay the extra price of their goods instead of buying cheaper foreign products? There is a relation between business costs and the higher price of goods. Businesses are not government and they cannot tax.

right. Yaron Brook grew up as a poor boy, traveling from South Africa to Israel and then to a Texas university PhD program dressed in rags. He probably made his way to Texas on some kind of raft, paddling with his hands. His poor parents, international intelligentsia, worked hard to encourage him to earn his B.S. in civil engineering, but offered him no help along the way.

He really pulled himself up by his bootstraps. Why don’t you ask him who paid for that raft he got to Texas on?

You wrote:”The truth is that the goal of the welfare state is to make the productive sacrifice for the unproductive.”

Your blog consists of much broad assertion with little in the way facts to back it up. For example, Social Security is a major component of the “Welfare State” and it largely serves people who have worked their entire lives and are now too old to work. The people who collect Social Security today supported those were retired when they worked and those who work today support those who are currently retired and in turn will be supported by those who will be working when they are retired. It is no different from any other insurance program. It is just people who can work supporting those did work but can no longer work.

The same is true for Medicare, the recipients of Medicare, are those who worked their whole lives, paid their taxes, and now need assistance paying their medical bills. When they were young and working, they supported those who were then old and ill and now it is their turn.

Medicaid is largely a system whereby working people, those with jobs, but are paid such low wages and are working without benefits that they cannot afford health insurance. This is actually a subsidy for low wage employers so that their employees will not be so sick that they cannot be productive.

This is hardly the vile, parasitic system that you two describe but is rather American helping each other in the ways that each can.

The productive (young and working) are sacrificing for the unproductive (old and unemployed) to pay for things that they cannot afford, which you list as medical benefits, etc. Case in point.

It is entirely a vile, parasitic system and it is NOT Americans helping each other in the ways that each can. The productive do not have a choice; they are coerced into paying to support others. If you think it is not coercion, try not paying Social Security and see how that works out. The government is confiscating wealth and redistributing it as it sees fit.

I guarantee you that the vast majority of employers would rather forego the low-wage employer subsidy if that meant eliminating Medicaid and reducing taxes.

You wrote:”The productive (young and working) are sacrificing for the unproductive (old and unemployed) to pay for things that they cannot afford, which you list as medical benefits, etc. Case in point.”

Yes, and most of those same people who are young today will some day be old and need Social Security, then they will withdraw money from the same pool that they contributed so much to.

Social Security Fund is no different from the Highway Trust Fund. Money comes in from taxes, gets put in the fund, and then is spent on building highways. The United States Army is a government service I pay for with my income tax. The Interstate Highway System is a government service I pay for with Federal Excise Tax. Taxes pay for services, including but not limited to Social Security.

Is the US Army “immoral”? Is the US Highway Trust Fund “immoral”. They both take money that was non-voluntarily taken from all Americans and given to a small number of Americans. They are just as much “redistribution of wealth” as Social Security is.

I have to look no farther than my own neighborhood to see how much of a welfare state we have become. Currently I have 5 neighbors who all quit their jobs and applied for SSDI, and are now collecting a government check instead of being productive members of society. With SSDI their incomes are low enough so they now receive food stamps, and free government health care. In a group of 16 homes there are only 7 with a working adult, with the rest either being retired or on SSDI. I feel as though the situation presents an unsustainable economic problem for our country which must be addressed sooner rather than later.

Absolutely untrue! My husband and i own a small apartment building and EVERY single tenant is on disability and they are not elderly. There are no age requirements, just a phony dr’s note that says something like “so and so is too nervous to hold down a job”.

I agree that many young people gravitate toward being progressive. In my opinion it is largely due to them just getting out into the real world and trying to understand what works and what does not, it takes time for them to discover that most progressive ideas are insolvent. Also, our public schools push progressive drivel, how many union totting teachers do you know with conservative values? However, even with the progressive pushing their agenda in schools, many young people are figuring out much earlier in life that progressive are completely screwing the young. Ron Paul attracting large numbers of young voters is proof of this.

The Davey family should compare notes with all the Hasidic families living in Kiryas Joel, NY and New Square, NY. Many of them also collect government benefits and typically average 8 children per household. Reported household income is quite low, which makes me wonder how they can afford the relatively expensive housing they live in. Go to city.data.com and check their poverty and housing numbers. These two communities are virtually 100% Hasidic and government data provide a glimpse into their segregated world.

Where do these economists stand on people having babies they can’t afford to look after without massive government subsidies? Where do they stand on family planning and abortion?

It’s so nice to know that the productive top 400 wealthiest Americans are being exploited by the 150 million Americans who work to support themselves. The thrifty working class just needs to more thrifty. The aristocracy in this country are so hard working, and create so many jobs, it’s just so amazing. No wonder you followers of the little atheist are so enamored of them.

There is a reason Yaron and Don talk about morality. If the morality of altruism is accepted then there is no limit on what the state can do in the name of protecting others. The discussion over whether Social Security/Welfare is a ponzi scheme or insurance, robbing people or helping them, is moot. If we are a truly free people then what we are free of is force is our lives. Free to take actions to ensure our life, liberty and happiness. Regardless of how it is sold, packaged, or labeled, entitlement programs stand behind the idea that Americans are not free. We are owned by the collective ‘people’ of the United States, and the more capable- the more owed. This is the morality of altruism. The morality of sacrifice. The reason the United States came to quick prosperity and prominence is precisely due to the breaking of these chains, outlawing dog-eat-dog relationships leaving only win-win relationships in its place. But in the end it all returns to morality. If we are indebted to others for the right to live- no other justification is required. Call entitlement programs whatever you want, be preserved. But if we are indeed a free people these programs are the antithesis of that freedom and the embodiment of theft and servitude.

This is true within the limited scope of the argument. However, the welfare-to-GDP ratio has expanded to the degree that it has, because entrepreneurs and too many of civil society’s most intelligent, see the welfare state as the path of least resistance to get paid exorbitant sums of money, over which they are extremely risk averse, when it comes to how that money is directed. In other words: They too often fall far short of the heroic virtue expected by Ayn Rand.

daviddelosangeles, I would like to end the social security insurance debate. It was ruled when social security was first enacted, and later on in the court case Flemming vs. Nestor (1960); That Social Security is a TAX, not an insurance program. You are not owed the money that you paid into it. the government can stop paying you the benefits at any time, and change the rules any time that it sees fit. Had an insurance company forced me to pay 12 % of my income and my employer to pay 20% of my income to it, and then offered me a 10th of my money back after retirement.. I would be able to sue the crap out of them.. but it is not insurance, according to the supreme courts. Anything other than a tax is unconstitutional. this is why SS, welfare, and now obamacare are all taxes.

Mark Anderson, It is not the richest people that are hurt most by these programs. The average person, making the average wage will have contributed half of a million dollars into SS by the time they are 45 yrs old. without the SS tax alone, wages would be up to 20% higher, and your bring home would be at least 12% higher for your entire life… Most people would have their homes paid of by 33 years old. You will not get a tenth of the money you put into the system back. And by law, you are owed NONE of the money.